Tuesday, April 26, 2016

Jared Bernstein — The new age or the stone age: we either deal with the costs of trade or they deal with us

The next trade agenda must also, I’ve argued, pursue a new kind of trade deal, one that elevates a wholly different group of stakeholders than the largely corporate interests who have come to dominate that process.
That agenda must also incorporate an evolving understanding of international macroeconomics, one that incorporates “savings gluts,” wherein large trade surplus countries export savings to and import labor demand from deficit countries, capital flows and their contribution to “secular stagnation,” and the impact of these dynamics on the dollar, interest rates, the Fed’s macro-management, and inflation.
The problem we face, of course, is that it took way too long to get to this discussion. That has allowed protectionists/demagogues to blame immigrants and trade for all that ails us, which leads to the obvious solutions: get rid of the immigrants and build barriers to trade.
But those ideas can’t work in no small part because globalization is…um…a global force with a massive, infrastructure in place and benefits that American consumers will not comfortably sacrifice, nor should we, both for our own well-being and for the ability of emerging economies to lift their living standards through trade with richer countries.
Because we ignored the brewing problems with trade for so long, wasting time with fractious arguments over trade deals instead of dealing with the real problems identified by Autor et al and EPI, we’ve not built the policy architecture to deal with the micro and macro issues raised above (sorry, but “wage insurance” doesn’t get it).… 
On the Economy
The new age or the stone age: we either deal with the costs of trade or they deal with us
Jared Bernstein


Peter Pan said...

Better late than never, Stone Age hyperbole aside.

Matt Franko said...

"But those ideas can’t work in no small part because globalization is…um…a global force"

Wow this is really insightful...

All of this scrambling around by Democrat "economists" due to Trump bringing up the whole issue of trade in the first place... they're lost all they have is bibble babble like this...

"globalization is global!" nice insight...

Peter Pan said...

It's a force of nature, Matt. Now get with the program ;)

Tom Hickey said...

It's key to realize that meaning is determined by context. Words have many meanings and a loosely structured context in which they are being used can foster ambiguity — and such ambiguity is often used in persuasion.

"Globalization" has two related meanings. Generally, it means the tendency toward commonality owing to advances in communications and transportation technology. This becomes the "base case."

But it also means increasing commonality under s single system and that system is presumed by Western and Westernized ruling elites, as well as conventional economists, to be neoliberalism as a social and political theory based on economic liberalism, in which "free markets, free trade, and free capital flows" are determinative of social, political, and economic affairs and institutional arrangements.

This is what the US leadership means by US global leadership. Obama: "if we don't make the rules, then some other country, like China, will.

This view of globalization views the general trend toward global relations as a contest of competing views and power blocs. The US, along with its cronies, vassals, and minions, is determined to impose a single system in perpetuity by disallowing a challenger.

This is what the US is doing driving put against Russia and China's borders, since they are the chief advocates of multipolarism. It was the fundamental reason that the Western leadership was opposed to "socialism",' beginning in the 19th century. It is also the reason that conventional economic is configured the way it is as a propaganda device for economic liberalism and "globalization" under economic liberalism.

Since economic liberalism is incompatible with political liberalism as true democracy — government of, by and for the people — it's no surprise that things are going in the direction they are wrt to trade agreement that undermine national sovereignty and put corporations in control.

Chipping at the edge is not going to fix this. As Bernie has announced, a revolution is required and as he has implied that means replacing "capitalism" as prioritization of property ownership with socialism as prioritization of people and the environment. Unless socialism as prioritizing people and the environment replaces capitalism as prioritizing property ownership as the basis for globalization, the future looks dim for people and the environment.

Even if Bernie crashes and burns, this is far from over. Bernie did not start it but only gave it a push. Not it really has legs in the US, especially with young people, which is the right demographic for change.

Tom Hickey said...

BTW, I should add to the above that "globalization" in the sense of a trend toward greater commonality and integration is baked it. It's been happening for ages but slowly. Since the age of exploration began, the 1492 "discovery of America" is usually given as the key date, the process has quickened. It then greatly accelerated with development of technology. There is no stopping it now, short of a global disaster that sets civilization back.

My view is that this is a good thing. It is also a good thing that liberalism is a driving force socially, politically and economically. However, the pace needs to be modulated to prevent asymmetries from creating issues, and social, political and economic liberalism need to be integrated.

The problem now is prioritizing economic liberalism in the process on the assumption that economic liberalism entails social and political liberalism because "spontaneous natural order" that optimizes outcomes generally, and that not only TINA but also it is the best option for everyone concerned.

A competing vision and now to actualize it is needed now that the Marxist-Leninist-Maoist experiment has failed historically, leaving only one option on the table practically speaking.

Peter Pan said...

By globalization, I mean the tendency towards the lowest common denominator in areas such as labour costs, environmental regulations, tax structures, etc. All in the goal of maximizing profit.

Nationalism can check globalization and so can populism, as seen with the groundswell of support for Trump. But the Left is clueless, as they are on many issues. All they can do is try to scare us with apocalyptic visions of a New Stone Age.

Globalization, if taken to its logical conclusion, would make nation-states obsolete. If you believe that labour mobility and free migration is in our future, then you'll be in for a shock.

Fair Trade can be achieved through consensus, or from a backlash. The trend appears to be towards the latter. As usual, human beings prefer to accomplish things the 'hard way'.

Malmo's Ghost said...

Bernstein is an Obama globalist toady. Screw him and the yacht he floats on during summer weekends with his oligarch buddies.

And,Tom, you say:

"It is also a good thing that liberalism is a driving force socially, politically and economically".

Driving force? Really? Where at? Middle East? China? Russia? India? Central America? EU? balkanized United States?

And if liberalism leads to this so called commonality you speak of, then it certainly has a long long way to go, with little historical precedent to support such a notion.

Tall fences still make for good neighbors. This is metaphor. I'm not talking about our southern border fences :)

Peter Pan said...

The incentives contained in old fashioned vanilla capitalism have been a driving force for both good and bad for two centuries.

Tom Hickey said...

Driving force? Really? Where at? Middle East? China? Russia? India? Central America? EU? balkanized United States?

In the broadest sense, liberalism is about increasing individual freedom. Individuals have become freer to some degree in all those places. Generally speaking, poverty is decreasing in the world, too.

While there are so many "issues" that it is difficult to distinguish the health of forest from the many decaying trees that litter the ground, progress is being made in liberalism.

Especially owing to the influence of social media, young people everywhere now want to be like young people everywhere else. In many places this is running headlong into tradition, but it's happening — everywhere — even though in many places it is still very dangerous.

Malmo's Ghost said...


I am actually encourage in most cases by the drift socially, politically, and economically of the young. But I am very skeptical that this has legs. Life is a brutal teacher and I suspect the typical cynicism that life brings will creep into youth idealism, as it has in the past. There's a wall that is essentially impossible to breach concerning the liberal idea. In other words people are tolerant of others and get along to a certain point, but at some point heads inevitably butt. Idealism goes in the toilet at that point. Always has and likely always will.

Tom Hickey said...

Der Spiegel
Vibrant, Noisy and Booming: Welcome to the New Moscow
Christian Neef and Matthias Schepp

No going back.

Tom Hickey said...

BTW, disregard the political rant in the above. Otherwise it draws an interesting picture of what's happening in Moscow.

Malmo's Ghost said...

Tom, interesting what's happening in Moscow, but we've have that scene in balkanized America for eons and yet intolerance is ubiquitous as ever.

Tom Hickey said...

America is still extremely free and in many ways getting freer with social liberalism expanding wildly and young people more open. The US has a way to go, for sure, but we've come along way, too, and US culture is one of the strongest liberalizing forces for young people globally.

Twenty years ago Chinese students were coming to the University of Iowa and it was interesting watching them getting Americanized. I asked one of them what they liked best about America, expecting maybe "pizza" or "jeans."They really did love jeans. Instead, without hesitation he said, "Freedom!"

Now they are arriving more "Americanized" that the young people from Iowa. Many of them would fit right in to the hippest American cities. They seem right at home. China as backward or a backwater seems to be a thing of the past.

Peter Pan said...

I'm glad I don't live in the US. You can keep your twisted version of "freedom".

Malmo's Ghost said...

Clubbing is freedom. Herd mentality is commonality.

In the end "conform, consume, obey"= Americanized freedom. 60's redux is nothing earth shaking.

Tom Hickey said...

The statement that "Eternal vigilance is the price of liberty" has been attributed to Thomas Jefferson and others, but the statement's truth is unquestioned. Samuel Adams said, "If ye love wealth greater than liberty, the tranquility of servitude greater than the animating contest for freedom, go home from us in peace.

Freedom doesn't come on a platter. TPTB mightily resist it other than for themselves and their class.

In the countercultural revolution of the Sixties and Seventies a lot people went to the barricades in the US, got tear gassed, beat and even shot. But there was a cultural revolution and the country became a lot freer culturally.

Then there was an authoritarian backlash and that struggle is still going on. People are still getting gassed, beat up and shot.

9/11 was the kicker. It was an authoritarian takeover that is now spreading through the liberal world. Just another swing of the pendulum in the historical dialectic.

Given the mood of young people there is going to be some serious pushback. There is already serious pushback against the bipartisan Establishment through Bernie and Trump's campaigns.

But the same thing has happened before. The Protestant Reformation was largely successful but not without a lot of blood spilt, and it sparked a reaction in the form of the Counter-Reformation, which was also successful to some degree and is still in progress. The RCC has greatly liberalized since then.

The revolutions of 1848 were not immediately successful but the change sought were largely delivered in the aftermath of WWII with the collapse of the old order in Europe based on the remnants of feudalism.

So listen to Mr. Natural, and keep on trucking'. It's happening.

Tom Hickey said...

Clubbing is freedom.

It is when it was not permitted previously, or was so against tradition as to be prohibited de facto.

Music and art have traditionally been powerful vehicle for social change. The countercultural revolution in the US in the 60-70's was significantly based on the music. It inspired and sustained.

Malmo's Ghost said...


No offense to today's youth movement, but the 60's youth movement was far superior and earth shaking than what we see today from the platitudinous sound-biting, social media warrior, banal musically inspired young ones. In short today's youth are largely dumb-asses in comparison; so called freedom lovers notwithstanding.

Tom Hickey said...

That may be, MG, and I would like to think so, but looking backlit seems to me we were all a bunch of dumb-asses, too, but in a different way.

We were rebelling against the bland forties and fifties, and the traditional BORING culture we were expected to join. Of course, there was the anti-war aspect, too, that really drove it.

Basically, what we were saying is, "I don't want your fucking job, no matter how much it pays because I don't want to live that kind of BORING life and drink myself to death." Now, it's "I got no fucking job and a mountain of student loans to pay off."

Now, owing to our efforts, the young now longer have BORING future to look forward to, but one that they cannot afford in world in which the wheels look to be coming off.

Peter Pan said...

The youth of today are always the worst they've ever been... and every generation believes this. Perhaps it has been this way since life ceased being a struggle for basic physical survival.

But what about this "liberal" (or neoliberal) emphasis on individuality? If each person believes that their success or failure in life is entirely in their hands, then on what basis can the status quo be challenged?

I have also heard the argument that collectivist mindsets and movements are incompatible with liberalism, because they place the rights of a given collective above those of the individual.

As much as I enjoy having individual freedom in my personal life, I would have to reject liberalism because of its opposition to collectivism.

Tom Hickey said...

@ Bob

Integrating individual liberty, egality (different from economic equality), and community. The three are necessary for a good society as a free people determining themselves under laws and institutions of their choosing. Obviously, the society will only be good to the degree that the people are good and this results from both personal and social factors.

Then it is a matter of emphasis and focus.

Left libertarianism is about emphasizing individual liberty among the trifecta. The emphasis on individual liberty is an Anglo-American thing. Continental liberalism is somewhat different, for example, German ordoliberalism and French syndicalism.

I also would identify as a "communitarian," since "communitarianism" sounds so much like "communism," communitarians avoid the terms even though they identify with communitarianism as a social and political theory.

Malmo's Ghost said...

I don't believe the youth of today are the worst they've ever been. Far from it, actually. I do think, however, we had a peak youth movement in the 60's that is unparalleled historically, for many reasons, some of which Tom articulated.

As for the individual v the collective mindset, I know of few individuals that see the world as every man for themselves to succeed in living a good life. All that really differs with individuals is the depth and breathe of the collective that impacts the individual. Political abstractions aside, virtually all people within civilization operate partly collectively and partly individually. They aren't mutually exclusive states of being.

Peter Pan said...


I haven't read or heard much about communitarianism. From the Wiki article it appears centrist, but it would be necessary to flesh out the policies that are advocated. I would expect supporters of liberalism to categorize it as part of the Left.

@Malmo's Ghost

In practice, people operate with both mindsets. That doesn't stop them from spouting arguments that boil down to individualism = good and collectivism = bad. It's as if they feel compelled to do, simply because they have chosen to label themselves as 'classical liberals' or similar.

Peter Pan said...

Youth have been on the march in France:

Different kind of 'clubbing'.